A question I often get from clients is... "How much has the market changed/dropped since last year"

The answer, of course, is not a simple one. Different areas have been affected differently and even if similar markets different product has had different % drops in the year May 2008-May 2009.

One thing is for sure, whether you think it is a good time to buy or not.... Houses and condos are more affordable than they were a year ago or two ago.

How much more affordable? Well lets take an example, realizing that it isn't perfect and won't be the same as a percentage for any two properties.

Let's take a home that sold in May 2007 and then at its value in May 2009. The value has dropped 13% (again, don't use this number as the gospel, but I am using a specific Metro Vancouver home here)

So, the 2007 value was $700,000

In 2009, it is worth 13% less, or $609,000

So 13% less, right? Someone in 2009 is going to get a WAY better deal than 13% off the 2007 value, even if they pay the $609,000

To understand, let's look at interest rates.

In 2007, the price was $700,000. Let's assume the buyer is putting down 20% so we don't have top deal with CMHC fees (dispite me making this go away for the sake of simplicity in this example, REMEMBER to ALWAYS FACTOR IN ALL CLOSING COSTS, they add up! - talk to your Realtor)

So, $700,000 with a $140,000 down payment leaving $560,000 to Mortgage. Interest rates were 5.25% for a discounted 5 year rate (we'll do a 25 year amortization - 5 years is just the mortgage term)

Payments on that $560,000 are $3337 per month

Now, it is 2009, you are buying the house for 609,000 and putting the same $140,000 down, leaving $469,000 to be mortgaged. The kicker? Today you are getting a 5 year Mortgage for 3.69% (we'll use 25 years as our amortization again)

Payments on that $469,000 at 3.69% are $2388 per month! That is a savings of $949 per month, or 28.4% less expensive per month!

Last Thursday the Urban Development Institute held its Annual General Meeting and Bob Rennie was the guest speaker once again.

In the buildup to the talk, there was quite a bit of joking going around at the tables "I am sure that Bob will be positive even with what we have seen in this market" and things of that nature.

When Bob was officially introduced, there was even a chuckle in the room as it was said "and I am sure Bob will somehow be positive."

Let me tell you. Bob turned the skeptics in the room around really quickly! Using numbers gathered from an independent source, Rennie dove right into an hour long talk on many issues, but the key to it all was really how little supply there is.

Bob was careful to separate the village of "downtown" from the suburbs, giving a hint that he, like myself, realizes that there is potential for some further downward pressure in the burbs where values must be supported by local incomes.

An amazing time was had, and Bob Rennie, who I have known for years and consider to be a friend did an excellent job.

Please excuse the mess while I upgrade my website. In the meantime, you may access all my blog posts by clicking here.

Please excuse the mess while I upgrade my website to provide you with even more timely and topical information on our market and the process of buying and selling. In the meantime, you can access my blog by clicking here